Introduction
Chevron Corporation is a multinational firm that operates in energy industry within the international platform. With its headquarters based in San Ramon, California, it is regarded as larger firm in terms of income and market capitalization (Chevron Corporation, 2014). It is engaged in the production and selling of petroleum related products, gas and lubricants to businesses across 180 countries across the globe. The company’s large production catapults it to levels of such huge competitors like ExxonMobil and BP. Recently, the firm entered into the renewable energy source industry where production is focused on such known products like wind and solar energy (Chevron Corporation, 2014). Thus, the paper examines the company’s immediate business and corporate-level strategies as well as the current competitive environment in order to establish that best strategies for adoption in the long term.
Business-Level Strategies
Chevron conducts operations using a wide range of business strategies that include differentiation of products business-level strategy. The company’s products are differentiated into significant number of commodities like fuels, lubricants and renewable sources of energy. Differentiation of product assists companies like Chevron to uniquely discern their products as a way of cutting down on possible competition within the industry. The strategy plays a fundamental role in sustaining and attracting new loyal customers within the market (Bowen & Wiersema, 2005). Customers enjoy a good value for their money spent on products since the company manufactures high quality products. Considering the level of customer satisfaction, companies enjoy positive public image and other benefits related to adoption of technological advances. Chevron’s adoption of the strategy facilitates a lower cost for its products, which promotes customer’s perception and loyalty. Consequently, the firm enjoys competitive advantage over its immediate rivals, and substitutes within the market. Customers’ brand loyalty is another way that Chevron ensures competition is maintained at sustainable level (Chevron Corporation, 2015).
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Secondly, Chevron adopts a cost leadership business strategy, which requires entities to reduce product costs charged to consumers as a way of minimizing fierce competition. The strategy is adopted for both American and international markets to secure and sustain a significant market size for the firm (Chevron Corporation, 2015). Through reduced product costs, Chevron benefits from immense favor attributed to cost advantage considering that a substantial market niche is fully aware of reduced prices. Cost leadership is maintained by ensuring that company’s overhead costs and production processes is strong and fairly controlled. In consequence, the business continues to enjoy a larger profit margin despite the concentration of the industry with both giant and private label energy manufacturers in both the American and global energy markets (Chevron Corporation, 2015). By adopting the strategy, the firm enjoys easier absorption supplier’s price fluctuations in relation to raw materials. As a result, barriers to entry are created to prevent other small businesses to successfully enter the market in both the US and international platforms.
On that note, I think that Chevron Corporation should adopt cost leadership business-level strategy for long term operations. This can be associated with immense benefits attributed to cost leadership. For instance, it is easier for the company to attract and maintain a significant customer base through reduced product prices in comparison to rival price structures. Also, absorption of increased production costs is possible in cases of increased supplier costs, which translates to high profitability and customer brand loyalty.
Corporate-Level Strategies
A company’s corporate-level strategies are adopted to help with the formulation of strategic guidelines, and facilitate effective management processes. Through these strategies, organizations enjoy the capacity to achieve sole goals and objectives. Chevron deploys a wider range of these strategies to ensure that management processes and goals are attained at all times (Chevron Corporation, 2015). Some of the notable strategies employed include diversification of both macroeconomic and operational risks. The strategy ensures that the firm enjoys optimal level of outputs from its corporate operations and activities. Company’s human and capital resources is thus put into maximum use while at the same time protected from possible misuse and misappropriations (Kingsley, Vanden Bergh & Bonardi, 2012).
Furthermore, Chevron employs the transfer of core competencies as a mechanism to improve their current level of corporate operations in both local and international market platforms. It is crucial to note that businesses like Chevron seek to adopt the strategy in order to ensure that they remain on top spot within the industry. The firm successfully accomplishes the objective of being on top of its immediate rivals. It focuses on pumping more resources, and expertise into areas it always performs better in comparison to its biggest rivals within the market while, in turn, maximizing product value offered to customers. The business focuses on different areas of maximizing gains like adopting and retaining unique skill sets, technological advancements and even optimizing activities related to product’s sales and distribution (Kingsley, Vanden Bergh & Bonardi, 2012). Considering being rather larger operations, Chevron has successfully employed the strategy in both local and international based manufacturing plants. It is being exercised on aspects related to product distribution channels, improved sales forces, adoption of distinct logistical platforms, which promotes the business operations at all company’s levels. This particular corporate-level strategy also allows restructuring of the firm’s operations, which strengthens efficiency levels in relation to both production and selling of energy products at all market places.
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Following the above-mentioned corporate-level strategies, the firm will immensely benefit from adopting and sustaining a transfer of core competencies strategy for long term operations. The strategy fairly complements growth and development aspects, which is required to ensure that fierce competition is kept at sustainable levels. The business should employ more resources in promoting its underlying top notch distribution channels as well as sales force for purposes of ensuring that product imitation is minimized or even reduced completely. Transfer of core competencies ensures that close rivals cannot outshine the company’s production and selling processes at any given moment in time (Kingsley, Vanden Bergh & Bonardi, 2012). Customer value is also increased through core competencies since they get to enjoy unique products offered at relatively affordable prices.
Chevron Corporation’s Competitive Environment
The firm operates in an industry marred with high level of competition. It conducts business and operations in an industry comprised of large energy companies commanding significant market nice both in the United States of America and international markets. These companies are always in a struggle to outshine each other in order to secure substantial level of profits as well as customer base (Falola & Genova, 2005). Some of the most notable competitors operating in both the domestic and international markets include BP Oil Ltd and ExxonMobil. Most notably, these competitors employ almost a similar type of business and corporate-level strategies to conduct operations (Falola & Genova, 2005). For instance, they also employ product differentiation and cost leadership business-level strategies. However, the intensity and success of each one of them depends on the degree of resources utilized to foster both production and marketing process. Remarkably, these industry rivals also adopt similar corporate-level strategies as Chevron Corporation. Royal Dutch and ExxonMobil are certainly the two energy firms within the industry capable of achieving long term success in relation to high profits and customer base in the future operations. They both enjoy a significant amount of capital and human resources as well as technological advancements coupled with skilled expertise. The current global energy industry is hit by low consumer prices. Thus, Chevron is confident to maintain a steady profit margin since it took early measures to condone such effects from compromising operations. It means that the company best suited to enjoy long term success in terms of significant profitability margins.
Slow & Fast-Cycle Markets
Slow-cycle markets are characterized by lowly place market volatility and trade volumes, which affect trading from being conducted effectively. On the contrast, fast-cycle markets are business environments marred with immense levels of market volatility and trade volumes, hence promoting speedup business activities (Falola & Genova, 2005). ExxonMobil and BP Oil Ltd will likely differ in a slow cycle markets. It is attributed to their dependence on high trading volumes as well as market capitalization marketing spots due to their immense business size. In a fast-cycle market, these businesses are not likely to differ in both operations and profitability levels because they already enjoy a speedy business process as a result of the high trade volumes (Falola & Genova, 2005).
Conclusion
From the discussion above, Chevron Corporation just like many of its competitors engage in similar business and corporate-level strategies. Business-level strategies involve cost leadership and product differentiation since they all seek to establish and sustain a loyal customer base in both the United States of America and foreign international markets. Corporate-level strategies employed include diversification of both macroeconomic and operational risks as well as transfer of key competencies, which allows each firm a cost and competitive advantage over each other. However, Chevron ensures to maintain rivals away through adoption of an absorption mechanism of supplier costs so that their prices are not inflated to match up with increased production costs. It is a mechanism being employed to ensure that it maintains a top spot over present lowly placed consumer prices and fierce competition.
